Crypto News

Is XRP A Good Investment As Bitcoin Declines Continue?

ripple, xrp
Image by Arek Socha from Pixabay

Yerevan (CoinChpater.com) – XRP, the native token of Ripple Labs, is an attractive option for investors who seek to allocate their assets due to Bitcoin declines. The XRP/USD exchange rate stood at 0.88 ahead of the London session Thursday.

According to CoinShares’ latest report, the inflows to XRP funds exceeded $7 million, the largest inflow since April. Investors and traders also showed increased interest in Ethereum, which saw a $33 million inflow as the second-largest crypto.

On the other hand, Bitcoin suffered losses, as investors redeemed $141 million from Bitcoin funds in a week through June 4. The alpha crypto was consolidating at $36,842 in the European session Thursday.

XRP, Is XRP A Good Investment As Bitcoin Declines Continue?

Experts Weight In

XRP is closely associated with several banks, investment companies, and organizations worldwide. It is the 7th largest crypto with a $40.9 billion market cap.

Several research platforms offer predictions for the upcoming price of XRP in 2021. TradingBeasts platform suggested the price of the token will stay north of $1.70 this year. They also see the value reaching $2.24 in December 2021. WalletInvestor saw a slightly less bullish future for XRP, approximating the price around the $1.5 margin.

WalletInvestor predicted the bullish outcome before the recent market crash in late May, adding that the sheer price margins might change.

However, the fundamentals behind XRP remain the same. According to RippleNews, the token is attractive to investors for several reasons. First, powerful financial institutions are using the XRP token for their transactions — Santander, Axis Bank, and Yes Bank, to name a few.

Moreover, XRP does not have any counterparty risks, meaning it is not affected by the political situation in a given country or inflation of the fiat currency. The token also performs faster transactions than Bitcoin, as the fees stand at only a fraction of a penny.

XRP may also benefit from the recent improvements of the blockchain. It will change the XRP Ledger as the developers implement a Federated Sidechain to introduce smart contracts to the XRP ecosystem. The Sidechain promises a smooth transition into the DeFi sector, which has been growing rapidly throughout the past year.

Read more: Ripple Labs to enable smart contracts functionality — how does it impact XRP?

Where Is XRP Now?

The token still struggled to log gains amid the ubiquitous consolidation period throughout the market. As a result, XRP traded in a bearish pattern ascending triangle.

It consists of a horizontal resistance line that prevents the upward attempts (dotted line on the chart below) and a trendline with a rising slope, which supports the price and hinders breakdowns. Thus, the formation by itself does not have a pronounced continuation bias.

However, the preceding trend is the key. As the preceding sessions were bearish for XRP, the continuation pattern might follow suit, dropping the price even lower.

XRP traded in an ascending triangle. Source: XRPUSD on TradingView.com
XRP traded in an ascending triangle. Source: XRPUSD on TradingView.com

Bitcoin’s trajectory also consolidated, flashing bearish signs. The alpha crypto traded in a descending channel. This formation consists of the upper trendline connecting lower highs and the bottom trendline connecting the lower lows.

The 20-day exponential moving average (EMA-20: blue wave) also acted as a resistance bar in confluence with the upper trendline. Thus, if BTC manages to break the resistance, it can use the EMA-20 as support.

BTC showing signs of bullish divergence. Source: BTCUSD on TradingView.com
BTC showing signs of bullish divergence. Source: BTCUSD on TradingView.com

However, the Bitcoin 1D chart also shows optimistic signs in the form of a bullish Relative Strength Index (RSI) Divergence. RSI (purple chart on the bottom) is a momentum predictor, which can be useful in determining the future behavior of stocks or tokens.

The latest low point on the BTC daily chart dropped lower than the previous low. On the RSI, however, the lows went in the other direction. This divergence is a bullish sign, which could make the BTC price higher in the upcoming sessions.

As XRP is a token that facilitates financial transactions, it is hard to compare it to Bitcoin (BTC) or Ethereum (ETH). However, it has become more attractive to investors as the value of Bitcoin is continuing to consolidate.

The declines are ubiquitous across the crypto market, and solid predictions are hard to make in a crisis. But as BTC suffers losses, traders and investors tend to pay more attention to altcoins, seeking to hedge their assets. XRP looks like a viable option.

How useful was this post?

Click on a star to rate it!

Lilit_CoinChapter
Lilit Chichyan

Lilit is an enthusiastic writer, skilled in 3 languages, and interested in writing about the tech world, trading, art, and science. She also has a background in psychology and marketing, which helps deliver the right message to the target audience. Lilit is creative and fast and has the experience of writing for both big marketing companies and small websites and blogs.

Related "Altcoin" News